TIDMBT.A
RNS Number : 8109Z
BT Group PLC
18 May 2023
Results for the full year to 31 March 2023
BT Group plc
18 May 2023
Philip Jansen, Chief Executive, commenting on the results, said
"We have delivered our outlook for FY23: this year we've grown
both pro forma revenue and EBITDA for the first time in six years
while navigating an extraordinary macro-economic backdrop. Over
the last four years we have stuck firmly to our strategy and it's
working.
"Openreach is competing strongly and it's clear that customers
love full fibre. The Openreach Board has reaffirmed its target
to reach 25 million premises with FTTP by the end of 2026 and plans
to further accelerate take-up on the network. In Consumer we're
delivering for customers with strong growth in FTTP and 5G, and
we're also seeing green shoots in B2B with a return to revenue
growth in the final quarter in Global and the creation of our newly
integrated Business unit.
"By continuing to build and connect like fury, digitise the way
we work and simplify our structure, by the end of the 2020s BT
Group will rely on a much smaller workforce and a significantly
reduced cost base. New BT Group will be a leaner business with
a brighter future."
Continued strong delivery against strategy
-- We delivered revenue and adjusted(1) EBITDA in line with our
outlook for FY23, despite significant headwinds; normalised free
cash flow was delivered at the lower end of our guidance range due
to increased cash capital expenditure, primarily in Openreach
-- FTTP build of 702k premises passed in the quarter at an
average build rate of 54k per week, with 41% of our 25m build
completed; FTTP footprint of 10.3m, up 43%, with a further 6m where
initial build is underway
-- Customer demand in Openreach for FTTP extremely strong with
FY23 orders up 70% year on year; take up rate grew to 30.4% with
record net adds of 395k in the quarter; base now c.3.1m
-- Record quarter of Consumer FTTP connections up 50% year-on-year with the base now over 1.7m
-- We have 8.6m 5G connections, up 62% on last year; our 5G
network now covers 68% of the population
-- Cost transformation on track with gross annualised cost
savings of GBP2.1bn since April 2020 against our GBP3bn target,
with a cost to achieve of GBP1.1bn against a target of GBP1.6bn
-- Created Business through the merger of Enterprise and Global
to enhance value for all B2B customers, strengthen our competitive
position and deliver material synergies
-- The UK Government announced a three-year 100% tax expensing
benefit on qualifying UK capex, effective from 1 April 2023; this
will allow Openreach to deliver increased connections and offset
inflation whilst reconfirming our 25m FTTP target by the end of
2026
-- New metrics announced to track our transformation into a
next-generation connectivity provider (see page 4), focussed on our
networks, our customers and becoming a more efficient
organisation
-- Total labour resource(2) to reduce from 130k to 75-90k by FY28-FY30
Pro forma full year revenue and adjusted(1) EBITDA growth:
-- Revenue GBP20.7bn, down 1% with the growth in Openreach more
than offset by decline in the other units
-- Adjusted(1) EBITDA GBP7.9bn, up 5% due to growth in Openreach
and Consumer offset by a decline in Enterprise
-- Revenue up 1% and adjusted(1) EBITDA up 3% on a Sports Joint Venture ('JV') pro forma(1) basis
-- Reported profit before tax GBP1.7bn, down 12% due to
increased depreciation from network build and specific items,
partially offset by adjusted(1) EBITDA growth
-- Reported capital expenditure ('capex') GBP5.1bn, down 4%;
capex excluding Spectrum up 5% due to higher fixed network
investment primarily in Openreach for building, and connecting more
customers to, FTTP; cash capex was c.GBP0.2bn higher at GBP5.3bn
(up 10%) as we reduced our capital creditors; significantly lower
capex in Q4 given unwind of Openreach work in progress ('WIP')
-- Net cash inflow from operating activities GBP6.7bn;
normalised free cash flow(1) GBP1.3bn, down 5% due to increased
cash capex and adverse working capital movements offset by EBITDA
growth and a tax refund; increase in Q4 due to timing of working
capital, lower cash capex, and increased EBITDA
-- Net debt GBP18.9bn, up GBP850m primarily due to pension scheme contribution of GBP1bn
-- Gross IAS 19 deficit of GBP3.1bn, up from GBP1.1bn at 31
March 2022 mainly due to the impact of higher real gilt yields
partly offset by deficit contributions
-- Final dividend of 5.39 pence per share (pps) bringing the
full year dividend to 7.70pps, flat year on year
-- FY24 Outlook: revenue and EBITDA growth on a pro forma basis;
capital expenditure excluding spectrum of GBP5.0bn-GBP5.1bn;
normalised free cash flow of GBP1.0bn-GBP1.2bn
(1) See Glossary on page 3
(2) Total labour resource includes both employees directly
employed by BT and non-employees supplied by a third party
Full year to 31 March 2023 2022 Change
--------------------------- ---------------------------
Reported measures GBPm GBPm %
Revenue 20,681 20,850 (1)
Profit before tax 1,729 1,963 (12)
Profit after tax 1,905 1,274 50
Basic earnings per share 19.4p 12.9p 50
Net cash inflow from
operating
activities 6,724 5,910 14
Full year dividend 7.7p 7.7p -
Capital expenditure 5,056 5,286 (4)
-------------------------- --------------------------- --------------------------- --------------------------------
Adjusted measures
Adjusted(1) Revenue 20,669 20,845 (1)
Adjusted(1) EBITDA 7,928 7,577 5
Pro forma Revenue 20,431 20,306 1
Pro forma EBITDA 7,999 7,782 3
Adjusted(1) basic earnings
per
share 22.0p 20.3p 8
Normalised free cash
flow(1) 1,328 1,392 (5)
Capital expenditure
excluding
spectrum 5,056 4,807 5
Net debt(1,2) 18,859 18,009 GBP850m
-------------------------- --------------------------- --------------------------- --------------------------------
Customer-facing unit updates
Adjusted(1) revenue Adjusted(1) EBITDA Normalised free
cash flow(1)
-------------------------------------------- ---------------------------------------------
Full year
to 31 March 2023 2022 Change 2023 2022 Change 2023 2022 Change
------------
GBPm GBPm % GBPm GBPm% GBPm GBPm %
------------ ------------- ------------- -------------- -------------- ------------- ------------- ------------- ------------- --------------
Consumer 9,737 9,858 (1) 2,623 2,262 16 1,147 917 25
Enterprise 4,962 5,157 (4) 1,394 1,636 (15) 522 791 (34)
Global 3,328 3,362 (1) 458 456 - 63 131 (52)
Openreach 5,675 5,441 4 3,449 3,179 8 211 448 (53)
Other 27 27 - 4 44 (91) (615) (895) 31
Intra-group
items (3,060) (3,000) (2) - - - - -
------------ ------------- ------------- -------------- -------------- ------------- -------------- ------------- ------------- --------------
Total 20,669 20,845 (1) 7,928 7,577 5 1,328 1,392 (5)
------------ ------------- ------------- -------------- -------------- ------------- -------------- ------------- ------------- --------------
Fourth
quarter
to 31 March 2023 2022 Change 2023 2022 Change 2023 2022 Change
------------
GBPm GBPm % GBPm GBPm% GBPm GBPm %
------------ -------------- -------------- -------------- ------------ ------------- ------------- ---------- ----------- -----------
Consumer 2,306 2,416 (5) 659 557 18
Enterprise 1,270 1,290 (2) 384 384 -
Global 854 837 2 147 135 9
Openreach 1,420 1,373 3 879 811 8
Other 3 7 (57) (21) (18) (17)
Intra-group
items (764) (755) (1) - - -
------------ -------------- -------------- -------------- ------------ ------------- -------------- ---------- ----------- -----------
Total 5,089 5,168 (2) 2,048 1,869 10 1,222 513 138
------------ -------------- -------------- -------------- ------------ ------------- -------------- ---------- ----------- -----------
Performance against FY23 outlook
FY23 performance FY23 outlook
----------------
Change in adjusted(1) Up 1% Growth on a Sports JV
pro forma(1) revenue pro forma(1) basis
Adjusted(1) EBITDA GBP7.9bn At least GBP7.9bn
Capital expenditure(1) GBP5.1bn c.GBP5.0bn
Normalised free cash flow(1) GBP1.3bn Lower end of the GBP1.3bn-GBP1.5bn
range
---------------------------- ---------------- ----------------------------------
(1) See Glossary on page 3
Glossary
Adjusted Before specific items. Adjusted results are consistent
with the way that financial performance is measured
by management and assist in providing an additional
analysis of the reporting trading results of the group.
EBITDA Earnings before interest, tax, depreciation and amortisation.
Adjusted EBITDA EBITDA before specific items, share of post tax profits/losses
of associates and joint ventures and net non-interest
related finance expense.
Free cash flow Net cash inflow from operating activities after net
capital expenditure.
Capital expenditure Additions to property, plant and equipment and intangible
assets in the period.
Normalised Free cash flow (net cash inflow from operating activities
free cash flow after net capital expenditure) after net interest
paid and payment of lease liabilities, before pension
deficit payments (including their cash tax benefit),
payments relating to spectrum, and specific items.
It excludes cash flows that are determined at a corporate
level independently of ongoing trading operations
such as dividends paid, share buybacks, acquisitions
and disposals, repayment and raising of debt, cash
flows relating to loans with joint ventures, and cash
flows relating to the Building Digital UK demand deposit
account which have already been accounted for within
normalised free cash flow. For non-tax related items
the adjustments are made on a pre-tax basis.
Net debt Loans and other borrowings and lease liabilities (both
current and non-current), less current asset investments
and cash and cash equivalents, including items which
have been classified as held for sale on the balance
sheet. Currency denominated balances within net debt
are translated into sterling at swapped rates where
hedged. Fair value adjustments and accrued interest
applied to reflect the effective interest method are
removed. Amounts due to joint ventures held within
loans and borrowings are also excluded.
Service revenue Earned from services delivered using our fixed and
mobile network connectivity, including but not limited
to, broadband, calls, line rental, TV, residential
BT Sport subscriptions, mobile data connectivity,
incoming & outgoing mobile calls and roaming by customers
of overseas networks.
Sports JV pro On 1 September 2022 BT Group and Warner Bros. Discovery
forma announced completion of their transaction to form
a 50:50 joint venture (JV) combining the assets of
BT Sport and Eurosport UK. Financial information stated
as pro forma is unaudited and is presented to estimate
the impact on the group as if trading in relation
to BT Sport had been equity accounted for in previous
periods, akin to the JV being in place historically.
Please refer to Additional Information on page 46
for a bridge between financial information on a reported
basis and a Sports JV pro forma basis.
Specific items Items that in management's judgement need to be disclosed
separately by virtue of their size, nature or incidence.
In the current period these relate to changes to our
assessment of our provision for historic regulatory
matters, restructuring charges, divestment-related
items and net interest expense on pensions.
------------------- --------------------------------------------------------------
We assess the performance of the group using a variety of
alternative performance measures. Reconciliations from the most
directly comparable IFRS measures are in Additional Information on
pages 46 to 48 .
Click on, or paste the following link into your web browser, to
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